The state House approved legislation Thursday that could allow a tax break to help build the $650-million proposed Red Wings arena and entertainment district the Ilitch organization hopes to build in downtown Detroit, even as questions emerged about $2 million or more in unpaid property taxes the Ilitches’ Olympia Entertainment may owe the city.

Tax documents the Free Press obtained and first reported Thursday on Freep.com indicate the Ilitch entertainment empire owes Detroit more than $2 million in unpaid property taxes on Joe Louis Arena and Cobo Arena dating to 2006.

But the Ilitch organization released a statement late Thursday, saying the city’s tax bills are erroneous, adding that the company is proud of being a responsible corporate citizen.

“Upon further examination, it is our organization’s belief that the taxes in question have been accrued to Olympia Entertainment in what appears to be an error.

“Olympia Entertainment has not received any notices about the taxes in question. The City of Detroit is the property owner of Joe Louis Arena and Cobo Arena and is the taxable entity. Olympia Entertainment is incorrectly listed as the property owner of record on the tax rolls, and our organization will be in touch with the Assessment Division within the City of Detroit’s Finance Department to have the property owner of record corrected on the tax rolls,” the statement read.

State law says property normally exempt from property taxes — in this case, the city owns the property — are taxable to the lessee when it is leased for for-profit purposes. There are exceptions under the law, but it was not clear late Thursday whether Joe Louis Arena falls under those exceptions.

The tax bills became a topic of discussion Thursday as lawmakers in Lansing debated and then approved a bill that gives the pizza, sports and entertainment giant founded by Mike and Marian Ilitch tax breaks to build an arena for the Wings that would anchor a retail, entertainment and housing district downtown. The area behind the Fox Theatre, west of Woodward, has been named as one of three possible sites.

The state House passed the bill by a 58-49 margin Thursday afternoon. It would allow Detroit’s Downtown Development Authority to continue to capture funds — about $12 million a year — to help pay for infrastructure needs associated with the project that would be the new home of one of the National Hockey League’s most successful teams. The Red Wings typically lure thousands of visitors downtown to spend money at the city’s restaurants, bars and casinos, although this season has been sidelined by a player lockout.

State Rep. Lisa Howze, D-Detroit, said Thursday that she voted to approve the deal after she was told that, under terms of the Ilitch lease of Joe Louis, Olympia and the city agreed to split the property taxes 50-50, but that arrangement ended in June 2010 when the lease expired.

Discussions about a new arena have gone on for years, with both the city and the Ilitch organization hoping to get a new hockey arena rather than locking the Ilitches into another long-term lease at Joe Louis.

Details about the lease agreement weren’t available. The city wouldn’t provide the Free Press with a copy of the document Thursday.

Mayor Dave Bing’s office declined to discuss the lease deal or the property tax issue in detail, but spokesman Bob Warfield said the city “will work with the Ilitches to reconcile what they owe.”

Records reviewed at Detroit’s Finance Department’s Treasury Division show the amount the city says Olympia will owe by Dec. 31 is $2,272,354.11, with penalties and interest, dating to 2006. That figure includes 2012 winter property taxes of just over $58,000 due by year’s end; all other taxes were labeled delinquent.

City records show no payment has been made toward the delinquent taxes as of Thursday.

Olympia Entertainment has leased Joe Louis Arena, home of the Wings, from the city for years, but it wasn’t immediately clear which portions of Cobo are referred to in the tax bill.

The blockbuster plan for a new arena wouldn’t come without significant tax breaks, and there were differences of opinion on the bill, even among Detroit Democrats.

State Rep. Rashida Tlaib, D-Detroit, who voted against the bill, said the project would rob the state school-aid fund to benefit a corporation that was delinquent in its taxes to the city.

“Detroit is completely broke and this is a company that actually owes money to the city,” she said. “Your schools will end up paying for this project. We need to stop and evaluate this properly.”

But state Rep. Shanelle Jackson, D-Detroit, said it was a worthy project that was essential for the city. She voted in favor of the bill.

“Opportunities like this are few and far between,” she said. “This is an opportunity for investment in the city of Detroit, and to put Detroiters to work. Most of us would agree that we need jobs to uplift our community.”

Democrats in the Legislature had threatened to withhold their votes on the Ilitch financing arrangement in opposition to Gov. Rick Snyder and state Republican efforts to replace Public Act 4, the state emergency manager law voters repealed in November, with a bill that critics say would provide distressed cities substantially the same draconian options as before, trampling on local elected officials.

Nick Ciaramitaro, director of legislation and public policy for the American Federation of State, County and Municipal Employees Council 25, Detroit’s largest employee union, cited the delinquent taxes at a hearing Thursday before the House Tax Policy Committee, where the Ilitch organization was making its case for a law allowing taxes collected through Detroit’s DDA to be used for the new arena plan. Ciaramitaro, a former Democratic state representative from Macomb County, argued against the proposal, citing the unpaid taxes.

Council members and union leaders for months have pressed Bing’s administration to go after unpaid taxes and other revenues owed to Detroit by corporate enterprises and some of its wealthiest business leaders, particularly as city workers have borne deep cuts in pay and benefits as the city tries to right its deeply troubled finances.

On Tuesday, as the City Council approved crucial reform contracts Bing sought under the threat from the state that Detroit could be placed under an emergency financial manager, Councilwoman JoAnn Watson asked Bing whether the city would devote the resources to collect debts that she and others say could exceed $800 million.

Even if the city collected only a quarter of that amount, it would represent a significant turnaround in Detroit’s financial picture, Watson noted. The implication: It could help pay down Detroit’s immediate deficit -- now pegged as high as $326 million -- and ease pressure on the city to implement further cuts to public services and the city’s workforce as the state threatens deeper intervention in Detroit’s fiscal affairs.

Watson declined comment Thursday. She has emphasized in public meetings that Detroit is owed potentially hundreds of millions in unpaid concession, franchise, parking and other fees, and inaction on pursuing those funds hobbles the city’s efforts to stay afloat and address its enormous long-term pension and bond obligations.

State Sens. Tupac Hunter and Virgil Smith, Democrats from Detroit, said they supported the Ilitches arena plan but called the Ilitches to clear up the tax matter.

“There is no reason Mike Ilitch and his company should not be paying their property taxes on one arena while asking for tax breaks on another, and I hope this issue should be resolved right away,” Smith said.

Howze, a candidate for Detroit mayor in 2013, said she ended up supporting the bill because “there was a greater amount at stake than the taxes in question — a $600-million investment, 5,000 jobs and revenues from income taxes generated in Detroit. That far outweighed any back taxes they owed.”

Staff writers John Gallagher and John Wisely contributed to this report.